Practice Question 10

Q) Critically analyse the efficacy of crop insurance schemes propagated by the government over the last four decades, especially the latest crop insurance scheme of the union government, in addressing farm distress in the country.

Superb Hints:

Indian government has been propagating crop insurance scheme since independence like Comprehensive Crop Insurance Scheme (CCIS), Farm Income Insurance Scheme, National Agriculture Insurance Scheme (NAIS). But they have not been successful in addressing farm distress in country at its fullest. These schemes had various inadequacies associated with them which are as follows-

1. Delayed payments- According to a CAG report delay at the state level caused obstruction in providing financial aid to farmers.

2. Small farmers not covered- Small and marginal farmers constitute 85 per cent of the total farmers in the country while their coverage has just been around 15 percent.

3. Inadequacy of Funds-Governments had been reluctant in allocating adequate funds for subsidy required to support cost of insurance.

4. Centre-State negotiations - Problems arise when the central and the state governments have to agree on a subsidy-sharing formula. It ultimately affects marginal farmers.

5. Insufficient compensation - Inadequacy of the compensation amount in the case of crop failure disappoints farmers to join crop insurance.

6. Lack of Awareness-Government has remained unsuccessful in creating awareness about cop insurance schemes.

Data gathered by the National Institute of Securities Markets or NISM in 2014 found that average awareness about crop insurance country was only 38.8%, and average usage of crop insurance was merely 6.7%

Although earlier crop insurance schemes like National Agriculture insurance scheme(NAIS), Farm income insurance scheme(FIIS) has played significant role in betterment of agriculture but further improvements were needed in crop insurance policies. So, government has formulated ‘Pradhan Mantri Fasal Bima Yojana’.

Pradhan Mantri Fasal Bima Yojana (PMFBY)-

This scheme replaced the existing two crop insurance schemes viz. National Agricultural Insurance Scheme (NAIS) and Modified NAIS and is being implemented since Kharif season of 2016. There have been some achievements related with PMFBY but it also has some loopholes.

Noticeable achievements –

  • Increase in coverage-coverage of agricultural insurance increased from around three crores to over four crores.

  • Insurance over Natural Calamities Loss-Farmers will get full insurance benefit whenever they sustain crop loss on account of natural calamities which was not so in earlier insurance schemes like NAIS, MNAIS.

  • There will be no capping on the insurable sum.

  • Use of technology-The scheme also envisages using technology, including smartphones, remote sensing to capture and upload data of crop cutting to reduce delays in claim payment to farmers.


Inadequacies registered-

1. Assessment of crop losses - district or block level agricultural department officials do not conduct such sampling on ground and complete the formalities only on paper.

2. Loss to individual farmer - Like earlier schemes unit of insurance is ‘area-based’ — village/village panchayat for major crops and the area above that level for other crops. Individual farmers suffering losses will not get benefit unless the entire area gets affected.

3. Insufficient reach - Only 25 per cent of the cropped area has been covered under the insurance scheme so far. The goal now is to extend it to 50 per cent in three years.

The Pradhan Mantri Fasal Bima Yojana is a far superior scheme than the previous agricultural insurance schemes. However, at the state level, its vision is diluted and at the district level, its implementation is seriously compromised.

The government should examine the loopholes in PMFBY revise it in such a way so as to include more small and marginal farmers and raise their revenue. As India’s half of the population is indulged in agricultural activities it cannot afford to have inefficiencies in agriculture related policies.

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